Indonesia & Vietnam Sourcing Reports: Furniture

Accounting for about two-thirds of global rattan supply, Indonesia has a developing furniture industry that benefits from an abundance of raw materials.

Numerous sourcing hubs for rattan are located all across the country. A variety of materials is available as more than 300 of the plant’s species are indigenous to Indonesia.

Aside from a solid potential for raw components, acceptance of small orders is another key strength. Many suppliers are capable of sending shipments with as few as 10 pieces, more so if products are on stock.

The industry is highly exportoriented. Suppliers interviewed for the report collectively send almost all of their output to buyers in overseas destinations. The EU takes up nearly half of turnover. The US and the Asia-Pacific region are other key markets.

Among featured manufacturers, living room furniture is the top product category as it represents over twofifths of revenue. Dining and kitchen furniture is the second-largest segment, taking up one-third of exports. Outdoor and bedroom furniture each register less than one-fifth of sales to foreign markets.

The industry is mainly composed of small and midsize companies, practically all of which are owned by local entrepreneurs. Production processes are performed in-house except during peak season, in which some steps are subcontracted to home-based craftsmen. Traditional manufacturing methods are typically employed, although some stages require the use of handheld machines and large equipment.

Most suppliers are located in Java Island. Many have head offices in Jakarta, although factories are found in rural areas, where access to raw materials is easier. These include the provinces of West, Central and East Java, Bali, and South Kalimantan, as well as the Yogyakarta Special Region.

Due to government restrictions and tax regulations on natural rattan products, exports of furniture made of this material have been dropping over the past three years. On the other hand, revenue from synthetic rattan items has been growing over the same period since suppliers face fewer challenges in this segment.

The following are some of the key trends we see in Indonesia’s rattan furniture industry:

Difficult procurement of raw materials, particularly natural rattan, is a major concern among suppliers. Tougher competition with other local and foreign suppliers is also a crucial hurdle facing the industry.

Prices over the next six months are expected to increase to cope with higher raw material costs. Four out of five companies featured in this report will raise quotes minimally, however, adjusting them by less than 10 percent.

Most suppliers will focus on the US as their primary export market over the next 12 months as the business climate in that country is expected to continue improving.

Since 1996, CV Devina has been producing and exporting outdoor furniture. Last year, the company’s total revenue reached $200,000. The supplier sends four-fifths of output overseas. Australia and the EU each account for 40 percent of shipments. Germany, the UK and the Netherlands are the biggest markets in the latter. The rest is absorbed by the US. Eighty percent of orders are under ODM basis.

Gazebos and pavilions are the best-selling line, taking up one-half of exports. Chairs and sofas represent 20 percent. The product range also includes benches, chaise lounges, outdoor beds and dining furniture. Prices start at $25 and can reach $4,500. Basic folding tables are lowend. Garden chairs and park benches are offered for at least $55 and $115, respectively. Gazebos are between $780 and $4,500, depending on the size, material used and design complexity. Teak, bangkirai, merbau, ulin and coconut wood are the main materials used. They are sourced from Bali’s provincial capital, Denpasar.

Two designers are assigned to work with clients on customized orders. At least two models are launched every year. Samples are provided between seven and 14 days.

CV Devina’s head office, showroom and factory are located in a 1,000sqm production complex in Denpasar. The workshop is equipped with cutting, grinding, sanding and compression machines. All manufacturing steps are done in-house.

There are six permanent staff members. Fifteen additional workers are hired when large orders are placed, usually from December to May. The supplier can make as many as 500 pieces a month when operating at full capacity. The average monthly output is 300 pieces.

Cartons are normally used as packaging. Clients, however, can have this customized. The minimum order requirements are one piece for gazebos and 10 pieces for other items. Delivery time is between 45 and 60 days.

More information can be found in the report “Indonesia & Vietnam Sourcing Reports: Furniture” by Global Sources.